MUHAMMAD BILAL

ROLL NO 30
QUANTITATIVE METHOD

Definition:-
Quantitative forecasting relies on historical data that can
be measured. It is best for making short term forecasts as past
trends are more likely to reoccur in the near future than in the long
term.
why we use quantitative forecasting?
Quantitative forecasting enables sellers to figure out the future by
looking at the past performance data. Most companies have
collected data about their past performance, and this data can be
analyzed using different methods to create predictions of future
sales.
COMPONENTS OF QUANTITATIVE TIME SERIES

 Trend variation/ Trend/ Secular trend

 Seasonality/ Seasonal fluctuation
 Cyclic
 Constant/ Level
 Irregular/ Random influences
SECULAR TREND

A secular trend is the long-run pattern of

continuously increase or decrease in a series of
economic data.
SEASONALITY
it is used for short term forecast. It is a rhythmic annual pattern in
sales or profits caused by
 change in weather
 change in habit or social custom
Examples:-
when we talk about one week too much crowd on Saturday and
Sunday in the market.
CYCLIC VARIATION

Any pattern showing an up and down movement around a given

trend is identified as a cyclic pattern. The duration of a cycle
depends on the type of business or industry being analyzed. It is
used for LONG TERM.
CONSTANT VARIATION
It explain the demand of the product around the year is
constant. It means there is no increase or decrease in a
pattern.
Examples:-.
 Biscuits
 Toothpaste etc.
IRREGULAR OR RANDOM INFLUENCES

This component is unpredictable. Every time series has

some unpredictable component that makes it a random
variable. In prediction, the objective is to “model” all the
components to the point that the only components that
remains unexplained is the random component.
MODEL OF COMPONENTS
So choosing this model basically data is dependent in
the nature of forecast that we are doing.
Addictive Model:-
D = T+S+C+R
Multiplication Model:-
D = T*S*C*R